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EXHIBIT 10.19
CENTRUM INDUSTRIES, INC.
STOCK OPTION AGREEMENT
THIS AGREEMENT is made as of this 29th day of February 1996, by and
between Centrum Industries, Inc., a Delaware corporation ("Centrum") and
Timothy M. Hunter ("Employee").
WHEREAS, pursuant to the Agreement and Plan of Reorganization between
Centrum, Centrum Merging Corporation, and McInnes Steel Company ("McInnes")
dated December 5, 1995, as amended February 5, 1996, McInnes has agreed to
enter into an employment agreement with the Employee and Centrum has further
agreed, in connection with such employment agreement, to grant the Employee an
option to purchase shares of Centrum's common stock, effective upon the
Effective Date of Merger, as defined therein, according to the terms and
conditions of this Stock Option Agreement; and
WHEREAS, the Centrum Board of Directors has approved the grant of the
stock option pursuant to this Agreement to Employee as an inducement to
Employee to remain in the employ of Centrum or a Centrum affiliate.
NOW THEREFORE, in consideration of the mutual covenants contained in
this Agreement, the parties hereto agree as follows:
SECTION 1 - GRANT OF OPTION. Subject to the vesting schedule set
forth in Section 2, Centrum hereby grants to Employee the right and option to
purchase from it, on the following terms and conditions, all or any part of an
aggregate of One Hundred Twenty-Five Thousand (125,000) shares of Centrum's
common stock $.05 value (the "Shares"). The purchase price for all Shares
shall be One and 50/00 Dollar ($1.50) per share, exercisable and payable as
hereinafter provided.
SECTION 2 - VESTING SCHEDULE. The Employee's right to the option
granted in Section 1 shall be conditional and subject to the Employee's
continued employment with McInnes, Centrum, or a Centrum affiliate. Except as
provided in Section 5, the option shall be deemed to be unconditional and fully
vested, as follows:
A. If the Employee leaves the employ of McInnes,
Centrum, or a Centrum affiliate prior to December 31,
1996, then no shares will deemed to be vested, and
the Employee shall not be entitled to purchase any
Shares pursuant to this option.
B. If the employee remains an employee of McInnes,
Centrum or a Centrum affiliate through December 31,
1996, then as of January 1, 1997 the Employee shall
have the unconditional and unrestricted right to
exercise the option with respect to fifty percent
(50)% of the Shares.
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C. If the employee remains an employee of McInnes,
Centrum, or a Centrum affiliate through December 31,
1997, then as of January 1, 1998 the Employee shall
have the unconditional and unrestricted right to one
hundred percent (100%) of the Shares.
The portion of the Shares for which the Employee may exercise the option
unconditionally and without restriction as provided in this Section 2 shall
hereinafter be referred to as the "Vested Shares."
SECTION 3 - EXERCISE OF OPTION; CHANGE OF CONTROL. The Employee may
elect to exercise the option with respect to Vested Shares at any time on or
after January 1, 1997. Notwithstanding the above, if Centrum's officers or
directors execute a letter of intent (binding or non- binding) by which Centrum
will become a party to a transaction which will effect a "Change of Control" of
Centrum, Employee must exercise his options with respect to the Vested Shares
within the thirty (30) day period following the date of notice to Employee that
a letter of intent has been entered into, or else the option and all rights
granted by this Agreement, to the extent those rights have not been exercised,
will terminate and become null and void. No partial exercise of such option
may be for less than one (1) full Share. For purposes of this Agreement
"Change of Control" shall be effected if (i) Centrum merges with or into or
consolidates with another corporation following the requisite approval of the
shareholders of Centrum of such merger or consolidation and, after giving
effect to such merger or consolidation, less than fifty-one (51%) of the then
outstanding voting securities of the surviving or resulting corporation
represent or were issued in exchange for voting securities of Centrum
outstanding immediately prior to such merger or consolidation; (ii) there is a
sale, lease, exchange or other transfer (in one transaction or a series of
related transactions) of all or substantially all the assets of Centrum
following the requisite approval of the shareholders of Centrum of such
transaction or series of transactions; or (iii) the requisite approval of the
shareholders of Centrum is obtained to approve any plan or proposal for the
liquidation or dissolution of Centrum. The option shall be exercisable with
respect to Vested Shares only by Employee during his lifetime and only if
Employee was an employee of McInnes, Centrum or a Centrum affiliate on the date
three (3) months prior to the date of exercise. If Employee is disabled within
the meaning of Section 22(e)(3) of the Internal Revenue Code of 1986, as
amended (the "Code"), the reference to the three (3) month period above shall
be read as one (1) year.
SECTION 4 - METHOD OF EXERCISE. The option granted under this
Agreement shall be exercisable as provided above, upon written notice to
Centrum and the payment in cash to Centrum of the full purchase price of the
Vested Shares which the Employee elects to purchase.
SECTION 5 - TERMINATION OF EMPLOYMENT. In the event that an Employee
shall cease to be employed by McInnes, Centrum, or a Centrum affiliate, whether
voluntarily or involuntarily, for any reason other than death or disability,
all of Employee's rights to further exercise his option(s) as to Vested Shares
shall expire six (6) months after the date of termination of employment;
provided, however, that if
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the Employee is terminated "without cause," as defined in his employment
agreement with McInnes prior to the first anniversary of the date of such
employment agreement, then, notwithstanding Section 2 of this Agreement, the
number of Shares which shall be deemed to be Vested Shares under this Agreement
shall be one-half (1/2) of the total number of shares granted pursuant to
Section 1; and, provided, further, that no option shall be exercisable after
the expiration date set forth in Section 7. A leave of absence with the
express written consent of Centrum shall not be considered termination of
employment for purposes of this Section 5.
SECTION 6 - DEATH OR DISABILITY OF EMPLOYEE. In the event of the
death or disability of an Employee while employed by McInnes, Centrum, or a
Centrum affiliate, his right to purchase Vested Shares may be exercised (to the
extent that Employee was entitled to do so at the date of his death or
disability) by him or, in the case of the death of Employee, by his personal
representative or by any person or persons who shall have acquired the option
directly from Employee by will or by the laws of descent and distribution, at
any time within three (3) months after the date of his death or disability;
provided that if an Employee is disabled as defined in Section 3 of this
Agreement, the three (3) month period referred to above shall be read as one
(1) year. Notwithstanding anything herein to the contrary, no option shall be
exercisable after the expiration of the term of the option set forth in
Section 7.
SECTION 7 - TERMINATION OF OPTION. The option and all rights granted
by this Agreement, to the extent those rights have not been exercised will
terminate and become null and void at 5:00 p.m. on February 28, 2006.
SECTION 8 - SHARES AS INVESTMENT. By accepting this option, the
Employee acknowledges that any and all Shares purchased pursuant to the
exercise of the option under this Agreement shall be acquired for investment
and not for distribution, and upon the delivery of any and all of the Shares
due to the exercise of the option granted hereunder, the Employee shall deliver
to Centrum a representation in writing and in a form acceptable to Centrum that
such Shares are being acquired in good faith for investment and not for
distribution. This Section 8 shall not apply in the event that the Shares have
been registered pursuant to the Securities Act of 1933 and applicable state
securities laws.
SECTION 9 - RESTRICTIONS ON SHARES. The Shares issued pursuant to the
exercise of the option granted in Section 1 shall not be registered under
federal securities laws or the securities of any state and will, therefore, be
deemed restricted and certain restrictions will be applicable upon the resale
of such security. Each Share will, upon issuance, contain a restrictive legend
in substantially the following form:
The common stock represented by this certificate has not been
registered under the Securities Act of 1933, as amended or
under the securities laws of any state. Each holder desiring
to transfer the common stock must furnish Centrum with a
written opinion reasonably satisfactory to Centrum in the form
and substance from counsel reasonably satisfactory to Centrum
by reason of
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experience to the effect that the holder may transfer the
common stock as desired without registration under the
Securities Act or the securities laws of any state.
This Section 9 shall not apply in the event that the Shares have been
registered pursuant to the Securities Act of 1933 and applicable state
securities laws.
SECTION 10 - DILUTION OR OTHER AGREEMENT. In the event that
additional Shares are issued pursuant to a stock split or a stock dividend, the
number of Shares then covered by each outstanding option granted hereunder
shall be increased proportionately with no increase in the total purchase price
of the Shares then so covered. If the issued and outstanding Shares are
reduced by a reverse stock split or other combination of Shares, (other than by
a transaction described in Section 3 of this Agreement), the number of Shares
then covered by each outstanding option granted hereunder shall be reduced
proportionately with no reduction in the total price of the Shares then so
covered. In the event that Centrum should transfer assets to another
corporation and distribute the stock of such other corporation without the
surrender of Shares, and if such distribution is not taxable as a dividend and
no gain or loss is recognized by reason of Section 355 of the Code, or some
similar section, then the total purchase price of the Shares shall be reduced
by an amount which bears the same ratio to the total purchase price then in
effect as the market value of the stock distributed with respect to the Shares
immediately following the distribution, bears to the aggregate of the market
value of such time of a Share and the stock distributed in respect thereof. No
fractional shares shall be issued, and any fractional Shares resulting from the
computations pursuant to this Section 10, shall be eliminated from the option.
No adjustment shall be made for cash dividends or the issuance to stockholders
of rights to subscribe for additional Shares or other securities.
SECTION 11 - RIGHT OF SHAREHOLDER. The Employee shall not have any
rights or privileges of a shareholder of Centrum in respect with the Shares
transferable upon exercise of the option granted under this Agreement, unless
and until certificates representing such Shares shall have been endorsed,
transferred, and delivered and the transferee has caused his name to be entered
as the shareholder of record on the books of Centrum.
SECTION 12 - NON-TRANSFERABILITY. The option shall not be
transferable and the option may be exercised, during the lifetime of the
Employee only by him. Except as specifically provided in this Agreement, the
option may not be assigned, transferred, pledged or hypothecated in any way,
shall not be assignable by operation of law, including but not limited to a
decree in a domestic relations proceeding, and shall not be subject to
execution, attachment or similar process. Any attempted assignment, transfer,
pledge, hypothecation or other disposition of the option, and the levy of any
execution, attachment, or similar process upon the option in violation of this
Agreement, shall be null and void and without effect.
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SECTION 13 - AFFILIATE. As used herein, the term "affiliate" shall
mean any present or any future corporation which would be deemed an affiliate
of Centrum in Rule 12b-2 of the regulations promulgated pursuant to the
Securities Exchange Act of 1934.
SECTION 14 - NOTICES. Any notice to be given under the terms of this
Agreement shall be addressed to Centrum in care of its President at 6135 Trust
Drive, Suite 104A, Holland, Ohio 43528 with a copy to John W. Hilbert II, Esq.,
Fuller & Henry P.L.L., One SeaGate, 17th Floor, P. O. Box 2088, Toledo, Ohio
43603 and any notice to be given to Employee shall be addressed to him at 4138
Mountain Laurel Drive, Erie, Pennsylvania 16510, or at such other address as
either party may hereafter designate in writing to the other. Any such notice
shall be deemed duly given when mailed by prepaid regular, registered, or
certified mail.
SECTION 15 - BINDING EFFECT. This Agreement shall be binding upon
Employee and his executors administrators, and representatives and assigns, and
upon Centrum and its successors and assigns.
IN WITNESS WHEREOF, the parties have executed this Agreement on the date
first set forth above.
CENTRUM INDUSTRIES, INC.
By: /s/ George H. Wells
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George H. Wells, President and
Chief Executive Officer
"EMPLOYEE"
/s/ Timothy M. Hunter
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Timothy M. Hunter
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